Iceland on Thursday formally recognized Palestine and was to establish diplomatic relations with the state, two weeks after its parliament voted in favor of the move.
Palestinian Foreign Minister Riyad al-Malki, who was visiting the North Atlantic country for talks with his counterpart Ossur Skarphedinsson, welcomed the decision saying it had "great meaning" and went further than previous declarations of solidarity with Palestine.
According to the decision, Iceland recognizes an independent and sovereign State of Palestine within the pre-1967 Six Day War borders.
The two ministers also discussed the Palestinian bid to join the United Nations and how to restart the peace process in the Middle East, Reykjavik said.
Late last month, the official Palestinian news agency WAFA reported that Cyprus recognized a Palestinian state within the 1967 borders.
While European states are by and large less inclined to formally recognize a Palestinian state outside of peace talks with Israel, a growing trend to upgrade Palestinian missions to embassies has emerged.
Prominent European states who have already announced this upgrade include France, Spain and Ireland.
However, with its move, Cyprus decided to break ranks, sending Palestinian President Mahmoud Abbas a letter from Cyprus President Dimitris Christofias, in which he reportedly recognized a Palestinian state within the 1967 borders.
According to the WAFA report, Christofias wrote in his letter to Abbas of the "historic deep relations" between Palestine and Cyprus, stating his hope that a peace agreement would be reached which would ensure an independent Palestinian state with East Jerusalem as its capital.
Recent moves by Cyprus and Iceland to recognize a Palestinian state come in the wake of more substantial action amid South American countries.
Brazil, Argentina, Ecuador, Bolivia and Uruguay have also recently recognized a Palestinian state along the pre-war borders. Chile and Peru have given their recognition to a Palestinian state as well, but without specifying borders.
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